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The option is activated when
the workbook is shared. It allows you to compare
the change history in the workbook and merge the
shared books together. As in the dialog below.

You should check out the
workbook sharing
features to understand this option.
If you are going to use the
merge functionality, it is important to use
separate copies of the same file, in the same
folder, by using
Save As...
and saving as a different name. Providing
you do this after setting up the shared
workbook, you will always retain a link and be
able to merge them together.
Below shows you two workbooks
during a merge:
User 1 enters some
names.

User 2 enters some
dates and more names

User 1 enters an
additional name

Finally, User 1
'Merges' the workbooks using the menu option,
which asks for the other file(s) to merge to in
the dialog below. (The file(s) being merged
must have a different name, be in the same
folder, saved and closed)

Resulting in this merged book
for User 1.

During this merge there were
no conflicts reported but if there were, these
would be decided by the setting in the
Shared Workbook
dialog.
You will note the small
triangles in the top left of each cell, merged
from the other book. This shows where the
change came from and who made it, like so (A
little like auto-comments). These changes can be
reviewed and rejected or accepted via
'Tools>Track Changes':
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